The reimbursement is based on an agreement in 2004, amended in 2005, and includes a nearly $4.85 million dollar payment, plus interest, owed to the developer for improvements such as streets, water, sewer, drainage improvements and traffic signals.

The city has some funds to cover the reimbursement and will be borrowing $4.3 million to pay the rest, said Finance Director Mindi Snyder.

The city council approved the notice of intent to issue certificates of obligation in Tuesday night's meeting.

According to the terms of the agreement, reimbursement is due after completion of the project and after sales tax revenue from businesses generates annual sales tax revenue large enough to support the debt for the reimbursement. On Feb. 14, Economic Development Director Matt Fielder reported the sales tax revenue is sufficient to cover the debt, according to a press release issued by the city.

By using reimbursement agreements to finance infrastructure improvements the city is able to avoid initial development expenses while still benefiting from property and sales tax revenue, the release states.

Businesses in the mixed-use retail and residential development on highway 59 between FM 762 and Reading Road opened in 2006. Since the opening of the retail outlets to December 2007, the city has received approximately $1.57 million in sales tax receipts. Half of that revenue is earmarked for the general fund revenue. One quarter of the revenue is to reduce the property tax rate and one quarter will be for the Rosenberg Development Corporation for the Economic Development.

The reimbursement agreement was made between the Economic Development Corporation and the developer. Since the city is able to secure a better interest rate it will be borrowing the money and the development corporation will be repaying the city with the money it receives in sales tax revenue, Snyder said.

The entire development value is assessed at more than $79 million and provides more than $430,000 in yearly property tax dollars.

On March 13 the council will need to approve an agreement with the development corporation to repay the debt. A final bond sale is expected in April, she said.